Lars Linken opened Lars Cleaners on March 1, 2017 . During March, the following
ID: 2521199 • Letter: L
Question
Lars Linken opened Lars Cleaners on March 1, 2017. During March, the following transactions were completed.
Mar.?1
Issued 10,000 shares of common stock for $15,000 cash.
1
Borrowed $6,000 cash by signing a 6-month, 6%, $6,000 note payable. Interest will be paid the first day of each subsequent month.
1
Purchased used truck for $8,000 cash.
2
Paid $1,500 cash to cover rent from March 1 through May 31.
3
Paid $2,400 cash on a 6-month insurance policy effective March 1.
6
Purchased cleaning supplies for $2,000 on account.
14
Billed customers $3,700 for cleaning services performed.
18
Paid $500 on amount owed on cleaning supplies.
20
Paid $1,750 cash for employee salaries.
21
Collected $1,600 cash from customers billed on March 14.
28
Billed customers $4,200 for cleaning services performed.
31
Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense).
31
Declared and paid a $900 cash dividend.
The chart of accounts for Lars Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.
Instructions
(a) Journalize the March transactions.
(b) Post to the ledger accounts. (Use T-accounts.)
(c) Prepare a trial balance at March 31.
(d) Journalize the following adjustments.
1. Services performed but unbilled and uncollected at March 31 was $200.
2. Depreciation on equipment for the month was $250.
3. One-sixth of the insurance expired.
4. An inventory count shows $280 of cleaning supplies on hand at March 31.
5. Accrued but unpaid employee salaries were $1,080.
6. One month of the prepaid rent has expired.
7. One month of interest expense related to the note payable has accrued and will be paid April 1.
(e) Post adjusting entries to the T-accounts.
(f) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for month of March 2017 and a classified balance sheet at March 31, 2017
Mar.?1
Issued 10,000 shares of common stock for $15,000 cash.
1
Borrowed $6,000 cash by signing a 6-month, 6%, $6,000 note payable. Interest will be paid the first day of each subsequent month.
1
Purchased used truck for $8,000 cash.
2
Paid $1,500 cash to cover rent from March 1 through May 31.
3
Paid $2,400 cash on a 6-month insurance policy effective March 1.
6
Purchased cleaning supplies for $2,000 on account.
14
Billed customers $3,700 for cleaning services performed.
18
Paid $500 on amount owed on cleaning supplies.
20
Paid $1,750 cash for employee salaries.
21
Collected $1,600 cash from customers billed on March 14.
28
Billed customers $4,200 for cleaning services performed.
31
Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense).
31
Declared and paid a $900 cash dividend.
Explanation / Answer
Answer A
Journal Entries
Date
Particulars
Debit
Credit
Mar-01
Cash
$ 15,000
Common Stock
$ 15,000
Mar-01
Cash
$ 6,000
Note Payable
$ 6,000
Mar-01
Truck
$ 8,000
Cash
$ 8,000
Mar-02
Prepaid Rent
$ 1,500
Cash
$ 1,500
Mar-03
Prepaid Insurance
$ 2,400
Cash
$ 2,400
Mar-06
Supplies
$ 2,000
Accounts Payable
$ 2,000
Mar-14
Accounts Receivable
$ 3,700
Service Revenue
$ 3,700
Mar-18
Accounts Payable
$ 500
Cash
$ 500
Mar-20
Salaries and Wages Expense
$ 1,750
Cash
$ 1,750
Mar-21
Cash
$ 1,600
Accounts Receivable
$ 1,600
Mar-28
Accounts Receivable
$ 4,200
Service Revenue
$ 4,200
Mar-31
Maintenance and Repairs Expense
$ 350
Cash
$ 350
Mar-31
Dividends
$ 900
Cash
$ 900
Answer B and E
Ledger accounts
Cash
Mar-01
$ 15,000
Mar-01
$ 8,000
Mar-01
$ 6,000
Mar-02
$ 1,500
Mar-21
$ 1,600
Mar-03
$ 2,400
Mar-18
$ 500
Mar-20
$ 1,750
Mar-31
$ 350
Mar-31
$ 900
Balance
$ 7,200
$ 22,600
$ 22,600
Common Stock
Balance
$ 15,000
Mar-01
$ 15,000
Note Payable
Balance
$ 6,000
Mar-01
$ 6,000
Truck
Mar-01
$ 8,000
Balance
$ 8,000
Prepaid Rent
Mar-02
$ 1,500
Rent Expense
$ 500
Balance
$ 1,000
$ 1,500
$ 1,500
Prepaid Insurance
Mar-03
$ 2,400
Insurance expense
$ 400
Balance
$ 2,000
$ 2,400
$ 2,400
Answer A
Journal Entries
Date
Particulars
Debit
Credit
Mar-01
Cash
$ 15,000
Common Stock
$ 15,000
Mar-01
Cash
$ 6,000
Note Payable
$ 6,000
Mar-01
Truck
$ 8,000
Cash
$ 8,000
Mar-02
Prepaid Rent
$ 1,500
Cash
$ 1,500
Mar-03
Prepaid Insurance
$ 2,400
Cash
$ 2,400
Mar-06
Supplies
$ 2,000
Accounts Payable
$ 2,000
Mar-14
Accounts Receivable
$ 3,700
Service Revenue
$ 3,700
Mar-18
Accounts Payable
$ 500
Cash
$ 500
Mar-20
Salaries and Wages Expense
$ 1,750
Cash
$ 1,750
Mar-21
Cash
$ 1,600
Accounts Receivable
$ 1,600
Mar-28
Accounts Receivable
$ 4,200
Service Revenue
$ 4,200
Mar-31
Maintenance and Repairs Expense
$ 350
Cash
$ 350
Mar-31
Dividends
$ 900
Cash
$ 900
Answer B and E
Ledger accounts
Cash
Mar-01
$ 15,000
Mar-01
$ 8,000
Mar-01
$ 6,000
Mar-02
$ 1,500
Mar-21
$ 1,600
Mar-03
$ 2,400
Mar-18
$ 500
Mar-20
$ 1,750
Mar-31
$ 350
Mar-31
$ 900
Balance
$ 7,200
$ 22,600
$ 22,600
Common Stock
Balance
$ 15,000
Mar-01
$ 15,000
Note Payable
Balance
$ 6,000
Mar-01
$ 6,000
Truck
Mar-01
$ 8,000
Balance
$ 8,000
Prepaid Rent
Mar-02
$ 1,500
Rent Expense
$ 500
Balance
$ 1,000
$ 1,500
$ 1,500
Prepaid Insurance
Mar-03
$ 2,400
Insurance expense
$ 400
Balance
$ 2,000
$ 2,400
$ 2,400
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